2017 (4) TMI 466 - AT - Income Tax

Levy of fee u/s. 234E in order u/s.200A - scope of permissible adjustments - whether appellant has filed TDS statement u/s. 200(3) beyond the prescribed due date? - Held that - The adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. This intimation is an appealable order under section 246A(a) and therefore the CIT(A) ought to have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A no such levy could be effected. As intimation under section 200A raising a demand or directing a refund to the tax deductor can only be passed within one year from the end of the financial year within which the related TDS statement is filed and as the related TDS statement was filed on 19th February 2014 such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions as also bearing in mind entirety of the case the impugned levy of fees under section 234 E is unsustainable in law. We therefore uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act. See Tanish Industries Pvt. Ltd. & I rfan Iqbalbhai Ajmerwala Versus The Dy. CIT 2015 (11) TMI 1507 - ITAT AHMEDABAD - Decided in favour of assessee

Summary

Issues:
Challenge to levy of late filing fee u/s. 234E in TDS statement beyond due date.

Analysis:
The appeals were filed against the Commissioner of Income Tax(Appeals)- IV, Surat, for the Assessment Year 2013-14, challenging the late filing fee u/s. 234E in TDS statements filed beyond the due date. The appeals contended that the levy of fees under section 234E was beyond the scope of permissible adjustments under section 200A. The judicial precedent cited by the appellant highlighted that the levy of fees under section 234E could not be effected during the intimation under section 200A, especially before 1st June 2015. The Coordinate Bench's decision emphasized that the adjustment in respect of the levy of fees under section 234E was unsustainable in law under the pre-amended provisions of section 200A. The appellant's argument was supported by various High Court decisions granting stays on demands raised under section 234E.

The Coordinate Bench's decision was crucial in determining that the levy of late filing fees under section 234E was not permissible before the amendment effective from 1st June 2015. The judgment highlighted that the intimation under section 200A, passed before the amendment, did not provide for raising demands related to section 234E fees. The appellant successfully argued that the levy of fees under section 234E was not legally sustainable before the amendment, and the impugned intimation was issued prior to the enabling provision for such levy. The judgment emphasized that the intimation under section 200A could only be passed within one year from the end of the financial year in which the related TDS statement was filed. As the related TDS statement was filed in February 2014, any levy under section 234E should have been made by March 2015, which had elapsed by the time of the impugned intimation.

In conclusion, the Tribunal allowed the appeals, directing the Assessing Officer to delete the late filing fees of the appellant under section 234E of the Income Tax Act. The decision was based on the legal interpretation that the levy of fees under section 234E before the amendment effective from 1st June 2015 was not permissible within the scope of section 200A. The judgment provided relief to the appellant by deleting the demand raised under section 234E, in line with the judicial precedent and legal provisions applicable at the relevant time.